Cause-Related Marketing: More than a Sales Tactic

The following entry is a summary of a recent research paper written for my Advertising Research course at IUPUI. To view the full paper, including all 20+ sources, click here.

Defining Cause-Related Marketing

Cause-related marketing (CRM) is a strategy where a for-profit company partners with a non-profit organization and agrees to share a portion of their revenue with the nonprofit. CRM first occurred during a 1983 marketing campaign developed by American Express, which partnered with the Statue of Liberty Restoration project for a short-term campaign. For every purchase a customer made with their American Express card, the company would donate a certain amount towards the restoration for three months.

Campaigns have increased in popularity since the 1980s and have undergone relatively little change in terms of format. In the 2000s, companies began aiming for long-term partnerships with nonprofits as opposed singular, short campaigns. Over time, causes also shift in their importance. A company might have a more successful CRM campaign about disaster relief if a hurricane has recently caused considerable damage. The length of the campaigns and the causes linked to them are two of the main ways in which CRM tactics have developed over time.

Identifying Successful CRM Tactics

The first American Express campaign yielded positive results for the company, increasing credit card usage by 28 percent and raising $1.7 million for the restoration project. The use of CRM strategies continues to grow in modern times, with sponsorship spending on causes in North America increasing from $120 million in 1990 to $2.6 billion in 2017. Companies that utilize CRM generally increase their sales and improve their brand’s reputation. Nonprofit organizations and charities acquire financial support and increased awareness of their cause. Results of campaigns vary based on a few factors.

The Cause

The cause associated with a CRM campaign can have a great effect on the results of the campaign. Campaigns are more likely to be successful if they are associated with a cause that is already well-known and currently popular within the public. Consumers are more likely to participate in a campaign that is timely and indicates some sort of immediacy, such as providing relief to victims of a recent hurricane.

The perceived fit between cause and company is also important. Consumers’ perceptions of the company prior to participating in CRM can impact the perceptions of the company-cause fit. If a consumer is not able to determine how the company and the cause align, they may become suspicious of the partnership or deem it less valuable compared to competing campaigns. Further suspicion occurs if the consumer already had negative perceptions of the company, and they may be unwilling to purchase products associated with the cause.

Some campaigns have been successful by allowing consumers to choose which cause donations will be attributed to. Subaru’s Share the Love event donated $250 for every Subaru sold or leased during a six-week period to the customer’s choice of several different charities, which has resulted in over $50 million raised for multiple causes since the start of the ongoing campaign. A study published in 2012 proved that consumers value cause choice in a campaign when it enhances their perceived role in helping the cause. Companies might consider a multiple-cause campaign to place more emphasis on consumer choice as opposed to the company’s decision.

The Execution

Another set of factors that affects the success of CRM is related to the overall execution of the CRM campaign, such as the creative elements of the campaign and cost of consumer participation.

A combination of logical and emotional appeals is best for CRM. Whether the campaign cause is locally or globally based can affect the way that consumers perceive the campaign and which appeals work best. Fear appeals, such as images of people in a disaster-stricken area, are more likely to persuade consumers to contribute to global causes. Hopeful appeals, like showing people volunteering together, are more likely to persuade consumers to contribute to local causes. In 2016, Harvard Business Review identified common elements found across 49 successful cause-related ads including: using strong visuals and simple messages, emphasizing social sharing, and focusing on a large-scale issue with attention drawn to personal interactions. Consumers like to feel as though their small donation is making a global impact.

The amount of money consumers must contribute can severely impact consumers’ willingness to participate. Though consumers are generally willing to pay more money for a product that benefits a cause, there is a “ceiling effect” on consumers’ willingness to pay. At a certain point, people are no longer willing to pay a higher amount in order to contribute a larger donation. Even the most generous consumers are only willing to pay a certain amount to support that cause.

The Impact of CRM Campaigns

As more and more Americans look to corporate social responsibility as a means of bettering the world, the impact of CRM continues to grow. The Red Nose Day campaign, led by Walgreens, raised more than $24 million in 2018, money that was contributed towards ending childhood poverty.

The positive impact of CRM partnerships can be long-lasting. The Subaru Share the Love event celebrated its tenth anniversary in 2017. In that year alone, the campaign raised more than 24 million dollars for its nonprofit partners, including Make-A-Wish Foundation, ASPCA and Meals on Wheels. Eyeglass brand Warby Parker built their company around a partnership with VisionSpring to provide glasses for people in need. The “Buy a Pair, Give a Pair” campaign has provided 4,000,000 pairs of eyeglasses in over 50 countries worldwide.